Figuring out your company's carbon footprint might seem like a big task, especially if you're a small or medium-sized business. It's important to understand your impact on the environment, keep your stakeholders happy, and find ways to make your business greener. But, there's often a major hurdle: getting all the necessary data. Many smaller businesses struggle with this, especially since resources and time are often limited. Trying to find reliable information on greenhouse gas emissions, especially those tricky "scope 3" emissions, can feel overwhelming.
This article is here to make that whole process easier. We'll look at the common data collection problems that businesses like yours face, and we'll provide simple solutions and easy estimation methods. We want to give you the knowledge and tools to overcome these challenges and create a trustworthy carbon footprint report. Understanding these challenges is the first step to making your business more sustainable.
Challenge 1: Lack of direct utility data (e.g., shared office spaces)
It can be tough to get the right utility data, especially if you're in a shared office space. This is one of the first big problems for many small and medium businesses. You need data on things like natural gas for heating (scope 1) and electricity (scope 2). Sometimes, the landlord handles all the utility bills, so it's hard to know exactly how much your business uses.
Solutions & estimation techniques
- Direct request: The simplest approach is often to ask your landlord or building management for sub-metered data or a breakdown of total building consumption.
- Allocation: If direct data isn't available, you can estimate your share based on a reasonable allocation metric. Common methods include:
- Floor area: Allocate total building energy use based on the percentage of floor space your business occupies.
- Headcount: Allocate based on the proportion of building occupants who are your employees.
- Industry benchmarks: As a last resort, you can use publicly available energy consumption benchmarks for similar office types in your region. Be aware that these are less accurate.
- Documentation is key: Whichever method you use, clearly document your approach, the data source (e.g., landlord statement, floor plans), and the allocation metric used. This transparency is vital for GHG data quality.
Challenge 2: Difficulty getting supplier-specific data (the scope 3 hurdle)
Tackling scope 3 emissions – those indirect emissions occurring in your value chain – presents significant supplier data challenges. This is often the largest part, sometimes over 90%, of an SME's footprint but the hardest to quantify accurately.
Suppliers might:
- Not track their own emissions.
- Be hesitant to share data perceived as confidential.
- Lack the resources to respond to data requests.
- Simply be unresponsive.
This leads to frustrating carbon data gaps in crucial categories like purchased goods and services.
Solutions & engagement strategies
- Prioritize: You don't need perfect data from every single supplier immediately. Apply the 80/20 rule: focus your engagement efforts on your largest suppliers by spend or volume, as they likely represent the biggest chunk of your scope 3 impact.
- Start with spend-based data: While less accurate, using financial data combined with industry-average emission factors (spend-based method) can provide an initial estimate for scope 3 categories. This helps identify hotspots even with limited supplier input. It's important, however, to be aware of the trade-offs involved when understanding different carbon accounting methods and their accuracy.
- Engage collaboratively: Frame data requests not just as a requirement for you, but as a collaborative effort towards supply chain sustainability. Explain why you need the data (e.g., your own reporting, customer demands, identifying shared reduction opportunities). Provide clear guidance on what data you need. For detailed approaches, explore strategies for effective supplier engagement on scope 3 data.
- Use secondary data & proxies: When supplier-specific (primary) data is unavailable, use reputable secondary data sources. This includes industry-average data, data from similar activities, or emission factors from recognized databases.
- Document everything: Record which suppliers provided data, which categories rely on spend-based estimates, and the sources used for any proxy data or emission factors.
Challenge 3: Tracking dispersed data (business travel, WFH, waste)
Another common issue for carbon accounting SME efforts is that relevant data often lives in different places or isn't tracked systematically. Think about:
- Business travel: Flights, train journeys, hotel stays recorded across various expense reports or booking systems.
- Employee commuting: How do your employees get to work? This often requires surveying.
- Waste: Data might only be available from waste contractor invoices, potentially lacking detailed breakdowns by waste type or disposal method.
- Working from home (WFH): Estimating the energy used by employees working remotely adds another layer of complexity.
Solutions & centralisation tips
- Standardise systems: Implement clear processes. Use a centralised travel booking platform if possible, or standardise expense claim forms to capture necessary details (distance, mode of transport).
- Employee surveys: Use surveys to gather data on commuting patterns (mode, distance, frequency) and WFH arrangements (days per week, estimated energy use – potentially providing employees with simple calculators or averages).
- Engage waste contractors: Ask your waste provider for detailed reports specifying waste volumes or weights by type (e.g., landfill, recycling, compost) and disposal method.
- Leverage software: Dedicated carbon accounting software SMEs can use often includes modules or templates to help collect and centralise these dispersed data points, making tracking much easier.
Challenge 4: Limited resources and time
Perhaps the most universal carbon accounting data collection challenge for SMEs is the constraint on internal resources – both time and dedicated personnel. Carbon accounting can seem like another complex task on an already full plate.
Solutions: Prioritization and tools
- Focus on materiality: Don't try to boil the ocean. Start by identifying your most significant emission sources ('hotspots'). Focus your initial data collection efforts there. Scopes 1 and 2 are usually more straightforward than the full breadth of scope 3.
- Iterative improvement: Accept that your first carbon footprint might rely heavily on estimates and averages. The goal is to establish a baseline and improve data quality over time as resources allow and supplier engagement matures.
- Utilize efficient tools:
1) Spreadsheets: Can work for very simple footprints initially, but quickly become cumbersome.
2) Carbon accounting software: Platforms like the Hedgehog Carbon platform are specifically designed to streamline data collection, apply emission factors, manage calculations, and generate reports. Many offer tiered pricing or even free versions suitable for SMEs starting out.
- Targeted support: If specific areas (like complex scope 3 categories) are proving particularly difficult, consider engaging external expertise. Hedgehog offers focused carbon footprint consulting to help SMEs overcome specific roadblocks without requiring a full-time internal hire.
The importance of documenting assumptions and data quality
Regardless of the challenges faced and the solutions employed, meticulous documentation is non-negotiable for credible carbon accounting.
- Transparency: Clearly state where data came from (e.g., utility bill, supplier report, estimation, proxy data).
- Methodology: Record the calculation methods and emission factors used.
- Assumptions: Note any assumptions made (e.g., allocation metrics for shared utilities, average data used for WFH).
- Data quality: Briefly assess and record the perceived quality of your data (e.g., high, medium, low accuracy). This helps identify areas for future improvement.
- Auditability: Good documentation makes your footprint verifiable if needed for reporting or certification purposes. Improving GHG data quality over time should be an ongoing goal.
Conclusion
While carbon accounting data collection challenges for SMEs are real, they are not insurmountable. By understanding the common hurdles – from accessing utility data and tackling scope 3 data collection to managing dispersed information and resource constraints – you can implement targeted strategies.
Prioritisation, leveraging smart estimation techniques, engaging suppliers effectively, utilizing appropriate tools like carbon accounting software for SMEs, and diligently documenting your process are key carbon reporting solutions.
Don't let the perfect be the enemy of the good; start the process, acknowledge carbon data gaps, and commit to improving data quality over time. Tackling these challenges head-on is fundamental to understanding your impact and building a robust sustainability strategy, laying the groundwork for meaningful reductions.
For a comprehensive overview of the entire process, explore the foundations of carbon footprint accounting.
